Merchants Trust raises dividend for 37th consecutive year – The UK equity-focused income fund Merchants Trust (MRCH), which has a 130-year-old history, reported results today for the year to January 31, 2019.
Highlights from the announcement
- Dividend growth of nearly 5%, ahead of inflation, and yield remains well above the sector average. The current dividend yield is 5.29%
- MRCH has managed 37 consecutive years of dividend growth
- Earnings growth +8.6%
Discussing 2018, MRCH’s chairman, Simon Fraser, said: “This has been an unusual year in which investment markets have been particularly volatile, reflecting a succession of macroeconomic concerns and geopolitical factors. MRCH’s overall performance has been driven by sharp moves in individual shares, especially at the smaller market cap level.
In a challenging year overall for stock markets around the world, Merchants’ UK equity portfolio outperformed its benchmark index, the FTSE All-Share by 0.3%, over the year to 31 January 2019, but ended in negative territory. The company’s NAV return was -5.2% compared with the benchmark total return of -3.8% due to the impact of gearing in a falling market.
The company’s share price fell by 3.5% over the year from 488p to 471p which is less than the fall in the NAV as the discount narrowed during the year. With dividends reinvested, on a total return basis, the value of the shares increased by 1.7%.
The board is recommending a final dividend of 6.6p (2018: 6.3p) which will increase the total dividend for the year to 26.0p (2018: 24.8p), a rise of 4.8%. Significantly, this will be the 37th consecutive year in which we have grown the dividend and we are extremely proud of our continued recognition as an AIC ‘dividend Hero’; this is an elite group of investment trust companies that have increased their dividends each year for 20 years or more.
The board monitors the company’s yield relative to other investment trusts in the UK Equity Income sector. At 31 January 2019, the company’s dividend yield of 5.5% ranked MRCH well above the sector average of 4.0%.”
Top ten equity holdings as at 31 January 2019
| Name | Value (£) | % of listed Holdings | Principal Activities |
| GlaxoSmithKline | 34,722,522 | 5.7 | Pharmaceuticals & Biotechnology |
| Royal Dutch Shell B | 32,881,886 | 5.3 | Oil & Gas Producers |
| Imperial Brands | 29,037,500 | 4.7 | Tobacco |
| HSBC Holdings | 27,351,282 | 4.4 | Banks |
| BHP* | 23,691,246 | 3.8 | Mining |
| BP | 22,871,226 | 3.7 | Oil & Gas Producers |
| BAE Systems | 22,382,183 | 3.6 | Aerospace & Defence |
| Legal & General | 22,178,700 | 3.6 | Life Insurance |
| SSE | 18,068,775 | 2.9 | Electricity |
| Standard Life Aberdeen | 17,981,531 | 2.9 | Financial Services |
| Top Ten Holdings | 251,166,851 | 40.6 |
MRCH: Merchants Trust raises dividend for 37th consecutive year